Investment Strategy

Private Equity Approach to the Public Markets

Blue Harbour’s investment approach seeks to add value like a private equity partner by working collaboratively with company management to design and implement strategic initiatives that unlock and create shareholder value. We focus only on U.S. public companies that could create significant value by implementing strategic or financial change. A critical component of our strategy is to support superior management teams who are committed to creating value for shareholders:

We source investment opportunities primarily through publicly traded markets but can also buy equity stakes directly from the issuer if appropriate
We work to acquire a significant minority stake and become a lead shareholder
Pricing is determined at market instead of by auctions
We partner with company management on critical strategic/financial issues

Value Added

With a longer term perspective than most public investors, we are able to partner with the company management and develop value-enhancing strategies. Our objective in assisting companies with these strategic initiatives is to act as a partner in order to unlock and create shareholder value over a multi-year time horizon:

Assist Management in Designing Business Strategy

Blue Harbour identifies investments in companies that are in a position to implement strategic changes within the enterprise. Strategic acquisitions, divestitures, spin-offs, asset sales and other transactions can often be used to improve the overall value of the corporate enterprise. We believe we can assist management in effectively creating and executing such strategies.

Assist Management in Optimizing Capital Structure

Blue Harbour believes opportunities exist to create value through an intense focus upon the application and management of capital within the enterprise. This includes investigating the use of REITs, MLPs, securitization transactions, special dividends and a focus on the allocation of capital, the management of cash flow, as well as the management of the overall corporate balance sheet.

Investment Criteria

Blue Harbour focuses on identifying U.S. companies that are well-managed but fundamentally undervalued. Our portfolio companies are high quality businesses with attractive valuations. These are companies that trade at low multiples of free cash flow or asset rich companies. Investment candidates must demonstrate good industry dynamics, sustainable franchises and recurring free cash flow business models.

We believe the edge to Blue Harbour’s investment strategy is our skill to actively create and unlock value within these opportunities

We were very pleased to have Blue Harbour as a lead shareholder in our company. They are sophisticated investors who think about the business the same way we do and were very supportive of our strategy and commitment to build shareholder value.

- Derek Smith,Chairman and Chief Executive Officer, ChoicePoint, Inc.

As a key shareholder, Blue Harbour’s support of Agere was important to us at a very critical juncture. We were on the same page in terms of our commitment to building shareholder value, and my team and I enjoyed working with them. They worked hard to understand our business and had insightful ideas on ways to create and unlock value.

- Richard L. Clemmer,Former Chief Executive Officer, Agere Systems, Inc.